What does your FICO score mean? FICO stands for Fair Isaac Corporation and is an evaluation of the risk that you will go late on a credit obligation. The scoring system is based on extensive research of payment habits and patterns. As with any system that evaluates potential risk, it is not 100 percent accurate nor is it 100 percent fair. However it is correct more often than not.
Fair Isaac Corporation issues credit scores. However, the score is synonymous with credit score. Recently each of the credit bureaus (Experian, Equifax, and TransUnion) joined together to create a new scoring system called VantageScore as an alternative to the FICO score.
FICO scores are typically between 300 and 800. Those with a score above 700 have a very low probability of late payments happening, on the other hand those with scores below 500 have an extremely good chance of late payments occurring. If you have a high FICO score creditors such as banks, credit card companies and mortgage lenders will offer you a lower rate because they view you as a low risk of default. On the other hand, if you have a low credit score, your rates will be much higher and your applications will be scrutinized more often.
FICO scores are most affected by late payments on mortgages than late payments on credit cards. If you show that you cannot be financially responsible to pay for your house then you may not be financially responsible to pay for your other bills.
In closing, FICO is short for the Fair Isaac Corporation. The score is a calculation of risk that helps creditors and lenders determine the likelihood that the debt will be repaid. The three major national credit companies use the score. A good score is over 700.